The next set of questions apply to a Floating Rate Note

--> Heres the initial spot LIBOR curve:

1 yr = 2% 2 yr = 2.5% 3 yr = 3% 4 yr = 3.4%

1) Calculate the price of a 4-yr (annual pay) FRN paying LIBOR + 2%, assuming initially that the markets required spread for this issuer is 2%.

After the FRN is issued (but prior to the first coupon being set), the LIBOR curve changes to:

1 yr = 3% 2 yr = 3.5% 3 yr = 3.75% 4 yr = 4%

2) Calculate the new price assuming the markets required spread remains 2%.